Put on a sweater!

I used to hear it every time we spent Christmas at our grandparents' house. They kept the thermostat somewhere around 65 degrees and one touched it only on the pain of death. As kids, we didn't understand. If it is in the low 20s outside, why not crank up the heat? For our grandparents, who were children of the Great Depression, it was purely an economic calculation. 

Energy prices are even higher today, so by being a little more thermostat conscious we could all stand to save some real money each year. By most estimates, for each degree you lower your thermostat, you will save 1% off your energy bill. The US Energy Information Administration reports that the average annual household heating bill runs about $1000. So, if your heating bill runs around $1000 in winter, and you typically keep your thermostat at 75, by lowering it to 65 you can save  $100 per year...just off of your heating costs! Just think of all the sweaters that would buy! Turning the thermostat down further at night and when you are away will help you save even more.  It is easiest with a digital thermostat (fairly inexpensive to buy and easy to install) which will automatically set temperatures throughout the day, although you should keep the house no lower than 55 degrees to keep your water pipes from freezing. In addition to saving some real cash, you'll be reducing your portion of carbon emissions by thousands of pounds per year (see http://www.stopglobalwarming.org/carboncalculator.asp)! 

For a more detailed account of how to become a world class thermostat tinkerer, see Annie Bond's post at http://www.care2.com/greenliving/10-thermostat-tips-save-money.html

Community Gardens

I was listening to This American Life the other day and they were playing recorded interviews conducted by that ethnographer of the common man: Studs Turkle. These recordings were of people recalling Depression Era America and how they coped and what they experienced. I was struck by one lady who said something along the lines of "Well, we lived in the country, so food wasn't a problem for us..." Most of our impressions of the 1930s are of soup lines, children selling apples for a nickle and long lines of men queuing to interview for a few available jobs--all in an urban setting. Except for the Okies heading out of the dust bowl for California, we really have little idea of how rural folks experienced the depression. Provided that you could pay the mortgage, farmers probably avoided many of the deprivations that were rampant in the cities. Unfortunately for us today, the US population (largely rural in the 1930s) has ballooned in urban areas, making basic food security an issue should the economic crisis wreak havoc on our food systems (a situation that is altogether likely in the case of either inflation or deflation--and it is clear that we're going to get one or the other).

To hedge against the worst possible outcomes of this crisis (i.e. food scarcity), we should look to the "victory garden" movement in the 1940s. People from all over America rallied during World War Two and planted millions of vegetable gardens to ensure food security for the US and its troops overseas. As budgets get tight, job losses mount and unemployment grows, we will need surplus food in every locale. The government may or may put out the call for all red-blooded citizens to take up the hoe and begin sowing the seeds of our future recovery. Regardless, we should be look ahead toward a dark couple of years and act in our own collective interests.

We would be wise to begin a similar movement today to have arrangements ready for planting in spring 2009. Backyard gardens are a good idea for those who have a backyard. For the millions of apartment dwellers in the US, and those of us who have really tiny backyards, community gardens could serve to bolster household food production and slash grocery bills while creating an opportunity to connect with other people in the area. So, start a community garden today and look forward to a bountiful 2009. The American Community Garden Association is a very good organization that promotes the creation of community gardens at http://www.communitygarden.org/. Their website has tutorials on all the steps involved in organizing a community garden. Also check out http://www.revivevictorygarden.org/ for good tips on how to optimize your yard or patio space for household gardens.

Unload that white elephant!

The "white elephant" aphorism comes from Southeast Asia and it means to be burdened with something both unsellable and of great value. Monarchs of certain regions in Southeast Asia would possess a number of these sacred animals and occasionally gift them to worthy recipients. The giftee, not possessing the power or wealth of a monarch, could not refuse or sell the elephant and would then have to pay for its room and board. The cost of care could not be offset by pressing the sacred animal into some kind of labor; thus, as long as the animal lived it would constitute a drain the finances of its new owner (and elephants live a long, long time).

To continue the line of thinking from the last post (Cash is king!), might I make a humble suggestion: if you own an SUV or a minivan or anything that gets less than 35mpg you would be well advised to sell it now.

Let me explain. Last summer, in an empty lot near my house, there began to appear SUVs of all kinds going for incredibly cheap prices. Gas was around $4/gal here and those monstrosities were starting to cost more than their owners ever thought they would. Now, as gas plunges below $2/gal, the lot is again empty. The value of these big damn cars and trucks has probably gone up as a consequence of low gas prices. But, as we all know, that ain't gonna last.

As credit is tight right now, and gas is cheap, I suggest getting out from under your gas guzzler by trying to get some cash for it. Gas prices will shoot back up in the next few months (says everyone from the Sierra Club to T Boone Pickens to the Bush administration) and that 20mpg vehicle will once again be both a serious drain on your family's finances and nearly worthless. But now, for those who can't see beyond the current dip in gas prices, your ride might again be valued at a reasonable price. So, now's the time to sell off that white elephant and get yourself into something more economical. In addition to easing the pull on your wallet, you might enjoy getting around in something with a considerably smaller carbon footprint.

Cash is king!

NOTE: I am not an economist. I am, in fact, the last person on earth from whom you should take financial advice. That said, here is some financial advice.

Survivalists have been harping about putting your money into gold or silver as a way to preserve or increase its worth. That may have been a good idea in 2006, and if you cashed in last summer, you may have made a bit of money. However, these precious metals have been crashing since July 2008. Unlike the survivalists I have no idea where to put your money, but a sure thing is that bulking up your savings (in FDIC insured accounts) is probably a good idea about now. There is no telling when it will be advantageous to pull money out of the stock market again. A mere TWO MONTHS ago the DOW bounced to about 11,500--so, if you were thinking about cashing in your 401K, with minimal losses, that boat has sailed. It is more likely to benefit you to leave your stock portfolio alone for now and await better days when you can recoup your losses. The question is, should we continue to shovel 8%-10% of our income into the stock market? There are a few things that we should seriously consider, given the present state of the economy.

IF you have the requisite 6-12 months of savings that would see you through a sudden job loss, then remaining invested in the stock market is probably a good idea--stocks are cheap and continuing to buy at these prices will most likely pay off in the long run, providing the stock market exists in the future. But, let's face it, Americans are notoriously bad savers. I would bet that many of us hold more debt than savings.

IF you have little in terms of liquid assets (i.e. cash in the bank), then you could find yourself in very desperate circumstances if you get the ax within next few years, especially as unemployment rises and jobs become more scarce. You need a rainy day fund because there is nothing but rain in forecast.

Ideas on how to generate cash, quickly!
1) Adjust your 401k, if you have one, from, say, 8% to 2% or 3%, or opt out altogether for a while (providing that opting back in is not a problem) and take the extra money you find in your paycheck and put it in a savings account.

2) Stop eating out. This can be difficult, but putting together an inexpensive, yet healthful, menu week by week can save you hundreds of dollars a month (depending on how much you eat out). Estimate how much you spend per month on food and restaurants, then estimate your grocery bill based on your menu. Take the difference, divide it into the number of paychecks you receive per month, and put that much into the bank every paycheck.

3) Get your Scrooge on! Don't spend a lot on the holidays this year. Send cards, cookies, artwork, pictures of your family, homemade CD compilations--get imaginative. I suggest spending $10 on a box of holiday cards and a couple bucks on stamps and then stash the remaining $500-$1000 you would normally spend in the bank. Trust me, your friends and relatives, supportive as they are, would rather see you keep your home than have to move in with them in the event that you lose your job next year.

4) Take a temp job. If you can sacrifice your weekends or a few hours in the evenings, then pick up a short term job...wherever. A call center, delivering pizzas, waiting tables, all good cash generators. Put your side job paychecks in the bank. Remember, you only need to do this until you have secured your rainy day fund.

5) Sell stuff. It has never been easier. Root through all your stuff and put the things you don't use or particularly need into consignment, on ebay or take it to a pawn shop. Hold a garage sale. Put the proceeds in the bank.

6) For the truly adventurous, you can take on a roommate or a boarder. Or consider moving in with a family member and splitting their rent/mortgage. Doing this can ultimately save you the most money per month. Put the difference in the bank.

There are other ways to generate cash, but the above suggestions are fairly easy and can be accomplished today. It is crucial that we start stashing money now and develop a buffer, the larger the better, that can see us through the difficult times ahead.

Keep it local

Now more than ever we should be investing in our own communities. When jobs were plentiful and wages were stable it was easier to ignore the fact that local business were closing shop. They could not beat the prices at the local big box retailer, so in the Darwinian marketplace they went under. Your local coffee shop, bookstore, hardware store or pharmacy were likely plowed under in recent years. This did not affect us much. It was a loss in a purely nostalgic sense--the same goods could be purchased for cheaper elsewhere and who needs local "flavor" when you can save more at the Walmart?

Well, times have changed indeed. The chain stores that siphon off local dollars to far flung places (including insanely high CEO salaries) will be "restructuring" in the months and years to come. That means either lower salaries for workers or layoffs. I suggest taking a second look at local businesses. In many cases the owners of these businesses have a stake in the community in which they operate. Their kids go to the local schools, they have friendships and other kinds of connections that are place specific, and often they will sacrifice a bit to avoid having to layoff their workers. When a critical mass of people begin to invest in community businesses, we all reap the benefits of their success: more jobs, higher wages and ultimately lower prices.

It is time for relocalizing our financial activity. We have seen what happens when we buy from overseas exporters--the precipitous loss of high wage manufacturing jobs. We have seen what happens when we put our savings in the hands of Wall Street finance wizards. And we are just now seeing what happens to our low wage service sector jobs when big companies have to recoup their losses--job losses total 1.2 million this year alone (half that since August!). To create the durable communities that we will absolutely need in the years to come, we must begin investing in locally owned and operated businesses now. Seek out a local bank, bakery, grocery store or food coop, a community agricultural organization, bookstore, restaurants, etc... Support local arts by going to a community theater production instead of a Hollywood movie, or go see a band at a local pub. Begin to relocalize your spending now and when your company managers in Los Angeles decide to close your office, you may well have viable options just down the street.

Numbers...

I was just reading Warren Brussee's blog at http://wbrussee.wordpress.com/ He points to some troubling economic indicators that suggest the recession will deepen significantly next year. Here are just a few highlights.

HOUSING Our economy is not going to settle down until the housing bubble is completely deflated. The Standard & Poor’s/Case-Shiller housing index showed a 17% drop in home prices in the last year. However, to get down to its historical inflation-adjusted level, homes must drop an additional 22%.

Foreclosure filings are up 71% from a year ago, and we are just beginning to see the effect of option mortgage resets, which will go on for another three years. On option mortgages, buyers can pay less than the interest on the mortgage, so that the amount of the mortgage actually is increasing as the value of the home is going down. Since much of what we have seen in foreclosures was only related to sub prime mortgages, we are only half way through the foreclosure explosion due to adjustable rate mortgages. And with 30-year mortgages at 6.5%, few people can afford to switch to fixed rate mortgages.

SPENDING Consumer spending dropped in July, August, and September at the highest rate in 28 years. Since the consumer is responsible for 70% of the GDP, this bodes poorly for the future economy. Consumers are out of additional debt sources and are having to adjust to living within their incomes. Consumer confidence posted its steepest monthly drop on record in October

CREDIT CARD DEFAULTS Lenders wrote off $21 billion in bad credit card loans for the first half of this year, which is 5.5% of outstanding credit card debt. In response, credit card companies are tightening credit, further exacerbating the slowing of the economy

UNEMPLOYMENT RATE The unemployment rate is 6.1%. But in the last week, here are a few company announcements of coming layoffs! Whirlpool 5,000 jobs. Qwest 1,200. American Express 7,000. Goldman Sachs 3,260. Chrysler 1,825. Xerox 3,000. Yahoo 1,500. Merck 7,200. National City 4,000. ArvinMeritor 1,250. And those are just the ones I happened to notice! So the unemployment number is destined to jump sharply in the coming months.

He concludes that this whole mess will take years to sort out and that we are far from climbing out of it (in fact we are just beginning the downward spiral). The stock market will have its ups and downs, but the effect of the financial crisis on our jobs, our mortgages, our economic future will be largely negative for the next few years. Brussee predicts that we will emerge from the crisis sometime in 2012 or 2013.

Stone soup

This story has it all: community, frugality and good soup!

Once upon a time there was a poor village in a land at war. There came into the small hamlet a company of weary soldiers. Tired and hungry, they encamped in the town near the town square. The villagers trembled, for they had no food to share with these men, and were afraid the men might cause trouble. Soon the small band of men uncovered a gigantic pot and began to lay a fire for it. Trudging back and forth to the town well, they filled the pot with water and set it carefully on the crackling fire. An old woman, peering from behind a shutter, noticed that they had dropped a round stone into the pot. Unable to contain her curiosity, she ventured into the open, approached the cluster of men around the pot, and after looking in the kettle, "What pray tell, are you cooking there?"

The soldiers looked up and replied, "Stone soup, my good woman, a wondrous dish and so, so much better if we were to have a single onion or two to drop herein!" "I am but a poor peasant and have hardly enough to eat for myself," she answered, "but perhaps there is a sad onion or two on my kitchen shelf". I will bring them here for your soup if you will share a bowl of your fine repast with me." They consented, and she quickly disappeared, hungry with anticipation at the meal.

As she returned and added the onions, a querulous old man approached and after looking into the kettle, called out, "What pray tell, are you cooking here?" "Stone soup, my good man, and a right good banquet it is," they answered, "but how much better it would be if only we had some simple carrot to add." The poor man shook his head and replied, "I am but a starving peasant, but perhaps my good wife has some carrots hidden away for our last bite of food. I would share them with you if you would share a bowl of your fine soup with me and that good woman." They nodded appreciatively and awaited the return of the old man, his old wife and the carrots. After a while, return they did, and added their meager bounty to the pot.

They all sat down and waited. A young girl with a small basket full of herbs from the meadow entered the square and joined the group around the large and bubbling pot. She too was persuaded to add her share and she too waited. One by one, the hungry peasants of the village came out to see what the excitement was about. And one by one, they added a few potatoes, a handful of beans, a small green cabbage and a bone.

There soon appeared in their midst the town butcher, who had long since closed his door. Huffing and puffing, and mopping his brow with with a large red handkerchief, he called out, "What is all this commotion? What pray tell, smells so wonderfully good here in this poor village, which has nothing to eat?" "Stone soup, Sir," said the soldiers, "a creation fit for a king. All that is lacking to gibe it truly proportions is a chicken."

Oohs and aahs were heard throughout the crowd of hungry peasants. It is said that one old woman fainted from the heavenly nature of the thought. The butcher quietly disappeared. Within a matter of minutes he returned, clutching a scrawny chicken, his very last, and dropped it, with applause from the crowd, into the pot. There was a great merriment in the town that night. It had been a long time since they had laughed and sung and danced - and a very long time since they had eaten so well. In the morning when the town awoke, the soldiers had packed up their pot and left the village, leaving behind only the stone.

They marched all day and in the evening entered another small town. They uncovered their gigantic pot and set about laying a for for it. A nervous old man approached them and asked, "What pray tell, are you cooking there?" The soldiers looked up and replied, "Stone soup, my good man, a wondrous dish and so, so much better if we were to have a single onion or two to drop herein!"

--The Brothers Grimm

Here's the recipe:

You will need:
3-4 cans vegetable broth (or make your own)
6 red potatoes (cut in slices about 1/4-1/2 thick)
3 carrots (peeled and sliced)
1 zucchini (sliced)
1 summer squash (sliced)
1 onion (diced)
3 cloves garlic (mashed through a press)
1 stalk celery (sliced)
1/2 bell pepper (sliced/diced)
1 cup green beans (fresh is best but canned/frozen works)
1 large tomato (chopped up)
1/2 cup peas (again fresh is best but canned/frozen works)
1/2-1 cup corn (frozen works better than canned for some reason)
salt & pepper
small amount of butter or oil for sauteing the veggies
1 small CLEAN and STERILE stone
shredded parmesan cheese

place a stone in a soup pot

saute the garlic, onion, green pepper, celery and carrots until the onion is tender

add broth, add potatoes and squashes bring to a boil and add the remaining ingredients (if you are using fresh veggies you can add them all at the same time.....canned/frozen will turn mushy if added too soon though)cook over medium-low heat until veggies are tender.

scoop out the stone.......serve with parmesan cheese on top

For a huge list of money saving soup recipes go to http://www.thatsmyhome.com/soupkitchen/